I think most people participating in the market know the market sentiment chart (psychology of a market cycle).
We have
Disbelief, Hope, Optimism, Belief, Thrill, Euphoria, Complacency, Anxiety, Denial, Panic, Capitulation, Anger and back to
Disbelief, but in short, the traditional market cycle is often divided into four stages: accumulation, markup, distribution, and markdown.
- The sentiment accumulation stage is characterized by low investors and slowly rising prices.
- The markup stage is when prices accelerate as more and more investors join the rally.
- The distribution stage is when the market starts to peak and profit-taking begins.
- The markdown stage is when prices fall sharply as investors sell their holdings[1].
I personally believe that although human society has evolved dramatically for several thousand years, psychological fluctuations have not changed much. It is the investor's psychology that creates buying/selling behavior, it is the buying/selling behavior that creates market fluctuations, then market fluctuations affect investor psychology. This loop takes place over time, combined with the increase and decrease of capital resources and asset prices to form the cyclicality of financial markets.
Currently, even though BTC price has reached 52.5K USD and crypto total cap has reached 2T USD, my subjective judgment believes that the crypto market is still in the "
Disbelief" stage and has not yet moved to "
Hope". I hear optimistic comments, and I hear pessimistic comments about the market. Many people are waiting for the uptrend, while many people are still waiting for BTC price to drop to 20K USD then they will be able to buy more BTC at cheaper price. I think the market needs a strong upward breakthrough for everyone to be optimistic and hope for positive scenarios.
However, that is just my subjective opinion, I would like to get your opinion:
- Which psychological stage do you think the crypto market sentiment is in? Please explain your opinion.
- Do you think market makers also use market sentiment charts to manipulate the crypto market?
References:[1]
Mastering the Market Cycle – Mindset and Strategies
Note:- My opinion was posted first in that topic, on Bitcointalk
- I leave the source link to avoid plagiarism accusation.
- I excluded/ included minor things from an original thread if necessary.